On 20th December 2021, following an investigation conducted by the Guernsey Competition and Regulatory Authority (GCRA), it was found that both Sure (Guernsey) Ltd and JT (Guernsey) Ltd had broken competition law by attempting to illegally control the provision of mobile networks in Guernsey, including the future introduction of 5G.
The GCRA’s investigation found that over a period of approximately a year, through repeated contacts and exchanges of information between them JT and Sure privately developed a joint plan without disclosing it to the GCRA or the States that would mutually benefit each in their home markets. They also exchanged information on their commercial strategy for introducing next generation mobile networks at a slower pace than that sought by the States of Guernsey and on a common ‘line to take’ that they were working to achieve the objective of introducing that technology to Guernsey in line with, or ahead of, the UK while privately agreeing not to do so. Airtel, the second largest mobile provider in Guernsey, was not party to the arrangements.
Applying the factors set out in law and following the approach in its Guideline on Financial Penalties, the GCRA has now decided to impose a financial penalty of £2,962,632 on Sure and £439,608 on JT for the infringement.
A basic penalty is initially calculated as a percentage of turnover and then multiplied by the number of years for which the infringement lasted, up to a maximum of 3. The percentage of turnover used in this case was 12%, which is towards the bottom end of the appropriate range for serious infringements. As the infringement had lasted between 22 August 2018 and 6 November 2019, the multiplier was 1.21 years. The basic penalty amount may be adjusted if there are mitigating or aggravating factors.
Sure took active and intentional steps to prevent certain key evidence from coming to the attention of the GCRA, namely suppression of that evidence and providing contradictory and misleading accounts of the matters contained in communications uncovered by the GCRA. Sure personnel were also found to have taken active and intentional steps to prevent certain key evidence regarding the role of a third party from coming to the attention of the GCRA, namely providing materially untruthful answers to questions put at statutory interview.
In terms of mitigating factors, the GCRA considers that the steps taken by JT constitute efforts to prevent a recurrence of the infringing conduct. Given the comprehensive and wide-ranging nature of the measures adopted and the speed at which they were adopted, the GCRA applied a reduction of 10% to the financial penalty imposed on JT.
The GCRA considers that the steps taken by Sure also constitute efforts to prevent a recurrence of the infringing conduct but given these measures were less comprehensive and wide-ranging than those put in place by JT and were not adopted as quickly, the GCRA applied a lesser reduction of 5% to the financial penalty to be imposed on Sure.
Guernsey competition law requires competitors to ‘compete not collude’ – making independent decisions about how they plan to behave in the market. Competitors are not allowed to exchange information with each other on their commercial strategy, which includes the matters on which JT and Sure repeatedly exchanged information – the speed at which they intended to introduce 5G and the removal by JT of its mobile network from Guernsey. This behaviour damages competition in Guernsey and, ultimately, Guernsey consumers.
CEO of the Sure Group Alistair Beak said: “This penalty is based on an investigation process which, in our view, was completely flawed from the outset and we are appealing through the Royal Court. We are steadfast in our belief that we have done nothing wrong; at all times Sure has acted in accordance with the spirit and letter of the law.
“We have now faced three different versions of the GCRA’s case. Twice the GCRA has had to rewrite its case when it realised that Sure was right and that their allegations were completely baseless. Yet again, with this latest penalty process, we find ourselves facing a regulator which seems determined to find against us, in the face of clear and compelling evidence that there has been no wrongdoing.
“The magnitude of the fine is extraordinary and one which sends a potentially chilling message on conducting business and attracting investment into Guernsey. It is also a concern that there should be such a significant disparity in the fines proposed for Sure and JT. While in large measure this reflects our respective market share, the increased fine for Sure is genuinely astonishing and, from our perspective, based on a polarised and fundamentally wrong view of the evidence.
“We are appealing through the Royal Court the flawed decision on which this fine is based and remain confident that we will clear the name of Sure and prove that there has been no wrongdoing. We will also continue to stand by the members of the Sure team who have acted with integrity and professionalism throughout this process, despite the spurious claims made against them by the GCRA, which are equally fundamentally wrong.
“Inevitably we will now need to spend further time, effort and legal fees on challenging this punitive action, on top of the work already done addressing the earlier versions of the GCRA’s case. We would much rather be spending our time and resources delivering the best possible service to customers and continuing our investment in the Guernsey economy through our fibre broadband project.”